Investing in financial securities inevitably involves risks on the one hand and opportunities on the other hand. This thesis bundles four different studies on risks and/or opportunities in financial markets. In one study, we examine the cross-sectional explanatory power of different...

In this study we evaluate the performance of actively managed equity mutual funds against a set of passively managed index funds. We find that the return spread between the best performing actively managed funds and a factor-mimicking portfolio of passive funds is positive and as large as 3 to 5...

In this study, we investigate if investors that have adopted investment strategies based on asset pricing anomalies documented in the academic literature (i.e., the low-beta, small cap, value, momentum, short-term reversal, and long-term reversal factors) consistently earn positive abnormal...